9911796707
TMI Blog1994 (8) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... ves and the members of the association and other similarly situated consumers of industrial alcohol who are being subjected to the illegal levy of sales tax and additional sales tax. It is contended that industrial alcohol which is used by the members of the petitioner-association as a raw material for manufacturing various chemical products is unfit for human consumption. It is also pointed out that, because of the Bombay Prohibition Act, 1949, there is no unit in the State of Gujarat which manufactures and sells potable alcohol fit for human consumption. The petitioners have further stated that, with regard to levy of sales tax on industrial alcohol, the Supreme Court in the case of Synthetics & Chemicals Ltd. v. State of U.P. [1991] 80 STC 270; AIR 1990 SC 1927, has held that the States have power to levy excise duty on potable alcohol for human consumption and as regards sales tax under entry 54 of List II, the States have no power to levy sales tax on industrial alcohol which is not for human consumption as it is within the exclusive legislative competence of the Central Government in the light of the relevant constitutional provisions read with provisions of the Industries (D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Supreme Court in Writ Petition No. 182 of 1980 decided on October 25, 1989. The Constitution Bench has taken the view that sales tax cannot be charged on industrial alcohol because under the Ethyl Alcohol (Price Control) Orders, sales tax cannot be charged by the State on industrial alcohol, and that State may charge excise duty on potable alcohol and sales tax under entry 54 of List II. Therefore, as the Constitution Bench decision of the Supreme Court stands today, no defence is available to the respondents in connection with collection of sales tax on industrial alcohol manufactured by the petitioners. It has to be kept in view that before the Constitution Bench, the State of Gujarat was represented through the learned Advocate-General and he had argued the matter amongst others. However, a review petition is already moved before the Constitution Bench for reconsidering the said decision and though the review petition is moved by the State of Uttar Pradesh, if the Constitution Bench decision is reviewed, then the basis of the present claim of the petitioners would disappear. It was further stated that even the State of Gujarat is desirous of moving a separate review petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in the case of State of U.P. v. Synthetics and Chemicals Ltd. [1992] 87 STC 289; [1991] 4 SCC 139. In that case, the court has held that the State Governments have power to levy and collect sales tax on the industrial alcohol. The court has specifically held as under: "The power of regulation and control is separate and distinct from the power of taxation. Legislative exercise of regulation or control referable to entry 52 of List I or entry 8 of List II is distinct and different from a taxing power attributable to entry 54 of List II or entry 92-A or 92-B of List I. The power to levy taxes on sale or purchase or consignment is referable to these entries, and subject to the other provisions of the Constitution, the taxing power of the State is not cut down by the general legislative control vested in Parliament and referable to the general topics of legislation." In the concluding part, it is held as under: "We are firmly of the view that the decision of this Court in Synthetics case [1991] 80 STC 270; [1990] 1 SCC 109 is not an authority for the proposition canvassed by the assessee in challenging the provision. This Court has not, and could not have, intended to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exure "B" a statement showing that the applicant has not recovered sales tax to the tune of Rs. 39,61,281.70 from 46 dealers. Because the interim relief was vacated by this Court on the basis of the judgment rendered by the Supreme Court, the Sales Tax Department assessed the returns filed by the applicant and raised a demand for an amount of sales tax, inter alia, for the period between April 20, 1990 and October 21, 1991, during which period the applicant was restrained from collecting sales tax from the consumers on account of the stay order of this Court. Thereafter the Sales Tax Department has issued two notices dated April 21, 1994 for Rs. 30,81,053 and Rs. 3,28,454 for assessment years 1990-91 and 1991-92 respectively. It is further contended by the applicant that solely on account of the interim stay order of this Court, the applicant was prevented from collecting the amount of sales tax from the consumers and, therefore, it is submitted that it is absolutely necessary to direct the original petitioners to make necessary payment of sales tax for the period between March 24, 1990 and October 20, 1991. Yeast Alco Enzymes Limited (respondent No. 9) has filed Civil Application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution is bound to restore the parties so far as they can be restored to the same position they were in at the time when the court by its erroneous action has displaced them from. In the case of Union Carbide Corporation v. Union of India AIR 1992 SC 248, the Supreme Court has dealt with this aspect in detail and, in paragraph 76, it is held as under: "76. But, in the present case, section 144, C.P.C., does not in terms apply. There is always an inherent jurisdiction to order restitution a fortiorari where a party has acted on the faith of an order of the court. A litigant should not go back with the impression that the judicial process so operated as to weaken his position and whatever it did on the faith of the court's order operated to its disadvantage. It is the duty of the court to ensure that no litigant goes back with a feeling that he was prejudiced by an act which he did on the faith of the court's order. Both on principle and authority it becomes the duty of the court-as much moral as it is legal-to order refund and restitution of the amount to the UCCif the settlement is set aside. In Binayak v. Ramesh [1966] 3 SCR 24; AIR 1966 SC 948, this Court dealing with scope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s involved.' (page 253)" It is also established principle that no act of court should harm a litigant and it is the bounden duty of courts to see that if a person is harmed by a mistake of the court, he should be restored to the position he would have occupied but for that mistake. This is aptly summed up in the maxim: "Actus curiae neminem gravabit". With regard to the principle underlying restitution, the Supreme Court has also considered it in the case of Chinnammal v. Arumugham AIR 1990 SC 1828, and has emphasised that there is one other aspect which is more important that one of the first and highest duties of all courts is to take care that the act of the court does no injury to any of the suitors, and when the expression "the act of the court" is used, it does not mean merely the act of the primary court, or of any intermediate court of appeal, but the act of the court as a whole from the lowest court which entertains jurisdiction over the matter up to the highest court which finally disposes of the case. Further, in paragraph 16, the court has quoted a passage from A.R. Antulay v. R.S. Nayak AIR 1988 SC 1531, wherein it is observed: "No man should suffer because of the mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btained interim relief by filing petition through its association, which according to them is a registered association and is also registered under the Bombay Public Trusts Act, it would hardly lie in their mouth to contend that petitioner No. 1-association does not represent its members. Lastly, there is also no substance in the contention raised by the learned advocate for the petitioners that the respondents have recovered sales tax because they have charged more than the controlled price. Whether or not the respondents have charged more than the controlled price cannot be decided in these petitions nor can it be held that the so-called "additional price" is recovered towards the amount of sales tax. Special Civil Application No. 951 of 1990: In the result, this petition is rejected. Rule discharged with costs. The petitioners are directed to pay and reimburse the respondents from whom they had purchased industrial alcohol the sales tax amount levied on the industrial alcohol for the period from March 24, 1990 to October 21, 1991, which was payable by them, but for the interim order passed by this Court on March 5, 1990. The petitioners are directed to pay and reimburse the res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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